Oracle Taps 'Outsourcing Model' for E-Biz Suite PSE is a Happy Customer in RP Yapster Press Release Aug 2002 BEIJING, CHINA - Oracle Corporation, the world's largest maker of enterprise software, is adding "outsourcing" as one of the "channels" that will deliver its software to customers in the Asia Pacific region. At OracleWorld Beijing held from June 11-14, Derek Williams, executive vice president of Oracle Asia Pacific, announced that 'components' or key business flows of the Oracle E-Business Suite, such as Customer Orders, Cash Receipt, Purchase Order, and others, can now also be implemented as an outsourced service, through Oracle partners. The new delivery channel that Oracle executives prefer to associate with "outsourcing," is called by most industry players as "applications service provision" (ASP). It is meant to increase the affordability of the E-Business Suite to mid-sized companies in the region, Williams explained. "Outsourcing is part of Oracle's core strategy of reaching out, especially to mid-sized companies," Williams said. Williams clarified the components of the Oracle E-Business Suite that would be delivered through the outsourcing model, are pre-built solutions that can be implemented in-house or as an outsourced service. These solutions - comprising business processes - are designed to help mid-sized companies move from several fragmented departmental systems to a single, integrated system. Since data security is a priority, Oracle makes sure the data from each business unit can only be accessed by authorized persons. The outsourcing scheme for Oracle's E-Business Suite is expected to help Oracle partners deliver to more mid-sized companies in Asia Pacific the integrated and configured processes essential to running a business, such as purchasing, selling and shipping, inventory management, cash management, budgeting, and financial reporting. To date, over 1,500 companies use the Oracle E-Business Suite, said to be the industry's first integrated suite of Internet business applications that automates critical business processes across both front- and back-office operations. The suite can streamline every area of a business - marketing, sales, service, contracts, order management, product design, procurement, supply chain, manufacturing, financials, projects, human resources, and professional services automation. Williams noted Oracle has been using the outsourcing model of delivering software to customers - over the past two years in the United States and almost a year now in Europe. Of the current 200 customers that have opted for this scheme, 80 have been won in the fourth quarter of the past year, he reckoned. The outsourcing model of delivering Oracle software in Asia Pacific is not actually new, with Oracle having pilot-tested such in Australia and Singapore in the last half of 2001, he added. But Oracle won its first customer in Asia Pacific for such 'new model' of software delivery only in Q4 of 2001, he clarified. Cost-Effectiveness Oracle executive vice president Ron Wohl, in a separate press conference at OracleWorld Beijing, pointed out that such customer went live with the pre-built processes of the Oracle E-Business Suite within two months. "The great thing about this is that the service level is twice as great, at half the usual cost," Wohl emphasized. Other Oracle executives claimed, however, that the installation process can be shortened from two months to 20 days, or even 5 to 10 days (as what has been achieved for some customers in the US), depending on the situation. In a separate interview, Jeffrey O. Henley, executive vice president and chief financial officer (CFO) of Oracle, highlighted that the lower cost combined with "high uptime, reliability, and security" that Oracle's outsourced business applications customers have enjoyed, serve as 'an effective advertisement' to other prospective customers. Rapid Implementation Frank Prestipino, vice president of Oracle's supply chain marketing group, also cited that the Oracle E-Business Suite, packaged especially for the mid-market, is "a cost-effective, online service," and "a fully integrated back office application" that can be hosted remotely for the customer or in-house. "Oracle's E-Business package for mid-sized companies would be very attractive to Asia Pacific's small to medium-sized companies that want rapid implementation of integrated e-business solutions at a lower cost, but without having to worry about data security," he stressed. As such, this newest offering from Oracle, through its partners, shows Asia Pacific companies that e-business transformation doesn't necessarily have to be equated with high costs, he argued. "What we are saying is that, with our new offering, becoming an e-business and more importantly, a global business, is now nearer the reach of Asia Pacific companies," Prestipino added. PSE Goes for Oracle E-Business Suite In the case of the Philippines, for instance, about 35 of the 100 companies that Oracle initially informed about its outsourced e-business application offering have expressed 'positive interest,' Prestipino reckoned. Abigail K. Yap, CEO for Active Business Solutions, Inc. (ABS), comments: "We have identified a need for a cost-effective, low-risk solution that allows our customers to begin their e-business transition today, starting with internal operations being efficient." "Oracle has enabled us to offer the Philippine Stock Exchange (PSE) a solution that addresses key business processes," she added. "We're glad there's a firm like ABS that has lowered our cost of obtaining Oracle's e-business solution to improve the operations of the PSE," said Ernest Leung, president of the PSE, in his presentation entitled: "E-Business Suite for Small Medium" under the "E-Business Strategies and Benefits" track at OracleWorld Beijing. Operational efficiency in institutions like the PSE is heavily dependent on electronic systems, Leung said. Asked if the PSE is not worried about the "risks" posed by the outsourcing model, Leung replied: "Outsourcing has a risk, but not if you find the right partner." Leung said the PSE got ABS as a technology supplier because the company has not only helped them deal better with technology but also helped them lower the costs of obtaining such technology. He said they believe their business relationship with the company will be for the long-run, unlike a previous IT supplier which started developing the PSE Web site but didn't finish that work. Accordingly, the PSE's in-house IT staff eventually had to shoulder the work left unfinished by the contractor. "In the long-run, we plan to get the whole e-business system of Oracle through ABS and get these integrated to improve our overall operations, particularly in ensuring transparency within the organization. The PSE's future IT thrust is to put up a system that's able to handle business processes - from ordering to settlement," he said. By August this year, the PSE president said they would acquire from ABS an Oracle-based electronic disclosure system to further improve the surveillance capabilities of the PSE. By September, the PSE will obtain, again with the help of ABS, an Oracle Internet procurement module. "The PSE is going for Oracle's e-business suite because of the flexibility of the system and the fast time it takes to implement such," Leung admitted. Who is ABS? Since late last year, Active Business Solutions, Inc. (ABS) a wholly owned subsidiary of Yapster e-Conglomerate Inc. based in Manila, has served as a key strategic channel partner for the Oracle E-Business Works solution for medium to small businesses (SME) in Manila and other countries across Asia Pacific. The Yapster group has been using Oracle E-Business Suite solutions for nearly four years, and last year added the Oracle Exchange capability known as SourcePilipinas marketplace - a landmark for the company and a window to the international marketplace. By providing a single instance of a pre-configured Oracle E-Business Suite for SMEs in the Philippines via the Internet as a hosted service or pre-packaged at the customer site, ABS has a unique and low cost solution to accelerate their transition to becoming e-businesses. This will allow them to quickly reap the benefits of e-business processes and enter the e-commerce world at an affordable price with low infrastructure costs. One of the major benefits will be the simplification of core business processes without compromise to their competitiveness. When a company implements Oracle's E-Business Works solution, the essential processes required to run the business are efficiently streamlined-from Purchasing, Payments, Orders Management, Inventory Control, Financial Budgeting to Catalogue management, and direct links to the marketplace is made available. The information flows are automatically pre-configured, with the system taking care of approvals, order acknowledgment and e-mail supplier payments. Security of data has been a high consideration with these types of systems, so all the data from all the business units are made up of one consistent set of data, secured and accessed only by authorized persons. This takes most SMEs from fragmented departmental systems to a single efficient and productive back-office system. ABS provides premier solutions to organizations that want to make the transformation to becoming a true e-business and become participants of e-marketplaces and enter global markets. ABS has accumulated a strong skill base of business consultants, who have come from industries within the Philippines complemented with overseas expertise.